AHRI:ASSIST

HR Metrics

 

It is becoming increasingly important for HR leaders to show the link between organisational performance and the HR function.  When an HR professional is able to show business acumen that results in a contribution to bottom-line results and a capacity to leverage services to the organisation's internal customer's, they are beginning to add HR value.

In order to do this, HR needs to be able to use measurement and evaluation techniques to:

  • diagnose vital workforce issues
  • prepare a business case to prove the value of any proposed HR initiatives
  • show how those initiatives add value to organisational goals.

There are a number of reasons why HR leaders would want to justify their department's effectiveness and relevance, including:

  • improving the credibility of and support for HR initiatives
  • obtaining feedback regarding HR services to ensure that the services offered are what customers actually need to help them deliver business goals, and using this feedback to:
    • improve the quality , relevance and delivery of HR services
    • determine what competencies and service delivery structure are needed to improve HR services and initiatives.

Measuring what HR does will help senior management to understand the efficiency and impact of the existing HR function in order to make accurate budgeting and outsourcing decisions.

HR must analyse and prioritise HR initiatives that are aligned with, and directly enable effective delivery of, the organisational strategy.  Using measurement to tell the story allows HR professionals and other business managers to make more effective decisions.

Metrics can be both quantitative and qualitative; however, the best model is to include both in your reporting.  Figures are vital to show that you understand the organisation's financial imperatives but the qualitative measures will tell you the underlying cause of key HR issues that are likely to impact on your organisation's cost and revenue structures. 

Some examples of the types of metrics an organisation may wish to examine are:

Financial Metrics

Recruitment and Selection

  • Job advertising (newspapers, online etc)
  • Time (reviewing resumes, interviewing candidates)
  • External recruitment consultant fees
  • Testing (psychometric, computer skills etc)

Remuneration and Reward

  • Salaries and/or wages
  • Payroll taxes
  • Superannuation
  • Leave entitlements (sick, annual, parental etc)

Learning and Development

  • Tertiary assistance
  • External training consultant fees
  • Internal training (time)
  • Training materials

WHS

  • Cost of accidents
  • Lost time due to accidents
  • Worker's compensation insurance

Other

  • Staff turnover
  • Absenteeism

Non-financial Metrics

Workforce demographics

  • Gender
  • Age (generational splits, ie gen x, baby boomers etc
  • Nationality and cultural background
  • Education levels
  • Years of service

Understanding metrics – some key quantitative metrics which are often used by Australian HR practitioners at present are:

  • Staffing rate – approaching retirement eligibility
  • Generation ration – silent & Boomers/Generation XY
  • Average Workforce tenure
  • Unscheduled absence per employee
  • Net recruitment ratio
  • Career path ratio
  • Recruitment source ratio – permanent
  • Total separation rate
  • Employee-initiated separation rate
  • Retention rate

The benchmarking data is broken down into industry, region and organisational size. Most of the key benchmarks relate to the following industries:

  • Capital intensive;
  • Education;
  • Utilities;
  • Federal Government;
  • Public Administration;
  • Private;
  • Public;
  • Services; and
  • Transport.

For more information on HR Metrics, please see our:

Information sheets

Benchmarking and best practice

Login or become a member to access

Common metrics

Login or become a member to access

Environmental scanning

Login or become a member to access

Examples of quantitative HR audit measures

Login or become a member to access

How to measure HR outcomes

Login or become a member to access

Should an HR audit be conducted?

Login or become a member to access

The HR audit process

Login or become a member to access

What decisions can be made from the audit findings?

Login or become a member to access

What is a HR audit?

Login or become a member to access

What is the HR Scorecard

Login or become a member to access

What is the purpose of a HR audit?

Login or become a member to access

Why should HR activities be evaluated?

Login or become a member to access

Checklists

Sample audit questions

Login or become a member to access

 Continuing Professional Development Opportunity

 See our short course on Workforce Metrics